(Bloomberg) -- US mortgage rates dropped for a fifth straight week, bringing slight relief to a housing market that’s been slammed by the rise in borrowing costs this year.
The average for a 30-year, fixed loan fell to 6.31%, the lowest since late September, Freddie Mac (OTC:FMCC) said in a statement Thursday.
This year’s surge in borrowing costs has pummeled demand in the housing market, sidelining potential buyers and even leading some sellers to hold off on listing homes. But rates have started to ease over the past month, leading to a slight uptick in applications to buy homes.
“The good news for the housing market is that recent declines in rates have led to a stabilization in purchase demand,” Sam Khater, Freddie Mac’s chief economist, said in the statement. “The bad news is that demand remains very weak in the face of affordability hurdles that are still quite high.”
The Federal Reserve has signaled that rates will likely go even higher. On Wednesday, Fed Chair Jerome Powell said the central bank has “some ways to go” on its campaign to curb inflation after boosting its benchmark interest rate by 50 basis points.
The overall climb in borrowing costs throughout the year will continue to impact the market. Brokerage and data company Redfin (NASDAQ:RDFN) Corp. expects 2023 to be slowest year for US housing since 2011, even as the firm forecasts a slight easing in rates by the end of next year.
Buyers have been squeezed by affordability issues. The monthly payment on a $600,000 loan at current rates is $3,718, up from $2,565 at the end of last year.
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